by William Newton

commerce

I’ve been thinking about old restaurants a lot. Not necessarily the fancy, Michelin-starred sort of places, necessarily, but places which have hung on for a long time. When you stand back and look at it rationally, it’s a bit weird that we put more of an emotional investment into the occasional spending outlay of eating out, than we do into things we purchase all the time, like soap or paper towels. So why is that?

We’ve been having a really hard time of it lately in Georgetown, the neighborhood in Washington, DC where I happen to hang my cape. One after the other, a number of long-established local dining institutions have been shutting down, to be replaced either by new restaurants or by retail space. Au Pied du Cochon, The Guards, and Cafe La Ruche, among others, have become historical footnotes in the history of the village. Now we can add Chadwick’s to that list.

Businesses don’t last forever, not even favorite old haunts, and particularly not in the restaurant world. True, some places have remarkable powers of survival. Lhardy in Madrid for example, has been serving outstanding food near the Puerta del Sol since 1839; Scott’s in London has existed in one form or another since the 17th century, albeit not in its present location, when it began life as a tavern serving oysters brought down by coach from Scotland.

In some cases the place stays the same, but the identity changes. Georgetown’s City Tavern Club, for example, occupies what started out as The Indian King tavern and coaching inn back in 1796, and has gone through numerous owners and name changes since then. Other dining spots manage to hold on to both location and ownership, such as Billy Martin’s Tavern, which opened in Georgetown in 1933 and is still owned and operated by the Martin family today. If Martin’s ever went bust, I think I would go into mourning.

Lest you think that such things only concern what we might call everyday people, the high and mighty have their own attachments to favorite dining establishments. For example, in the British press this morning there were reports of Prince Charles having personally written a letter to Antonio Carluccio, when the chef had to close down his popular Neal Street restaurant in Covent Garden. The place where celebrity chef Jamie Oliver got his start had to shutter, due to ill health stemming from the chef’s exhaustion. That is the nature of the beast of course, when the chef both defines the place and runs the business, as it can spell the inevitable end of a great dining establishment over time.

When we lose a favorite dining spot, particularly one that we have known for awhile, it’s a bit like losing a member of the family. We may even feel guilty about not visiting them more often, as if we owed a for-profit business some measure of sworn fealty or filial devotion. After all, this is just commerce, and an ephemeral sort of commerce at that: we eat the food, and it is gone.

Except what really distinguishes a favorite restaurant is not the food, but the memories we make there. A dining spot where we celebrated a significant event, for example, like a birthday or anniversary or first date, can burn bright in our memories long after we’ve forgotten what we ate. And even when we do remember the menu, more likely than not it’s not just the food, but the company who shared that food with us, that causes us to look back fondly at the place.

Restaurants will continue to come and go as tastes change, market forces expand and contract, and chefs retire or move on to other things. So while not turning into some sort of guilt complex, it’s important to periodically visit your favorite spots to help keep them going. More importantly however, you want to make return visits to places you like to eat, in order to keep your old memories fresh, and continue to make new ones. For the day will almost inevitably come when you can no longer sit down to dinner at a place like The Guards, in front of a roaring fire, eating the best cheeseburger in the village with a group of good friends in lively discussion. And that will be quite a sorry day, when it comes.

Right now, while everyone in social media is arguing over other things, a horrible little law is making its way through Congress which you ought to be aware of – if you happen to love art and care about capitalism, as I do.

The Art Newspaper reports today that a bill known as “The American Royalties Too Act” or “A.R.T.”, has gained six co-sponsors over the last three weeks. The bill would impose a resale royalty on works of art meeting certain sales criteria, and is modeled after a European concept known as “droit de suite”. Since my time at Sotheby’s Institute back in graduate school, the concept of droit de suite has struck me as both nonsensical and typical of those who, in order to solve a perceived problem, decide to create another one. I’ve warned about it on the blog before, as you can read here.

The wincingly awful use of the word, “Too”, aside, here’s what I promise you will happen over the next decade, if this “A.R.T.” bill passes:

1. The law will do little or nothing to aid most artists – and may actually hurt them.

In theory, this law is designed to protect struggling, up-and-coming artists. As Christopher Rauschenberg, son of the late artist Robert Rauschenberg wrote on HuffPo yesterday, those pushing this legislation believe we “should foster and support young artists if we want them to continue to create. Implementing legislation that equitably distributes the proceeds of creative output will cost taxpayers absolutely nothing, yet would mean a great deal to the artistic community.” [Helpful hint: any time you read the words, “equitable distribution” as a justification for anything, raise an eyebrow.]

In reality, if passed this law will largely operate for the benefit of already wealthy artists, their foundations, or their estates, such as that of Mr. Rauschenberg, by pouring additional thousands of dollars into their coffers every time a work of theirs is sold for up to 70 years after their death. At the same time, with a resale payment tacked onto every sale, those artists who are not already household names will find that prices for their work will remain artificially depressed, keeping sales turnovers of their work low. Most artists, in fact, never see their work come up for auction at any of the big auction houses, and this law will do nothing to encourage that to change.

2. The law will turn out to be a great tax-raising scheme.

While the law appears on the surface to be designed to help the poor and struggling artist, what is lost in the emotional component of the argument being made largely by those on the left – natch – is the fact that this is not free money, nor an act of beneficence on the part of Congress.

For royalty payments, you see, whether from sales or licensing of intellectual property, constitute taxable income. What Congress is proposing is really a way of imposing an additional income tax, without actually calling it that. The royalty payment will be taken by the auction house at the time of sale, and then the artist or his estate will be sent these payments, quarterly. Once that royalty payment makes it to the end point – the artist or his estate – the government can tax that income. So in truth, this is a way of squeezing art buyers out of just that little bit more of their money, even though the collection of said money will take place at a different end of the revenue stream.

3. The law will cause the market for Modern and Contemporary Art sales to shift away from the U.S.

Decades ago, Paris lost its primacy in both art gallery and art auction sales to London, in part because of the passage of draconian French laws regarding droit de suite and other forms of taxation. Over the past fifteen years however, and particularly after Britain adopted EU regulations, the center of the international art market has shifted from London to New York. With the implementation of this proposed A.R.T. Act, sellers are going to be faced with paying royalties – up to a cap of $35,000, depending on the resale price – on every piece of art falling under the protection of the law that is sold: a cost which they will pass along to the buyers.

Now yes, plenty of high-value auctions still take place in London today, and if this law passes they will still take place in New York, as well. However over time, markets tend to seek environments where they experience the fewest restrictions on their ability to engage in commerce, which is why sales at Sotheby’s in New York eclipsed those of the home office in London years ago, and also why the socks you are wearing right now were probably not made in America. If Europe suddenly became a (comparatively) cheaper place than the U.S. to engage in the art trade, the bulk of the buying and selling in the Modern and Contemporary art market could easily shift back to London. Rather than making things better for everyone, Congress could actually be making everything worse.

4. Is this bill really about achieving fairness? For whom?

In defense of this bill, co-sponsor Congressman Jerrold Nadler (D-NY) recently told The New York Times that, “To me, the bill is a question of fundamental fairness.” However under scrutiny, this moral argument falls to pieces in the face of reality. Under the European version of this law one of the wealthiest artists in the world, Pablo Picasso, is still collecting droit de suite payments – or rather, his already very wealthy children are, because he’s been dead since 1973. Does that seem, on a common-sense basis, to be “fair”?

What about a living, wealthy American artist, such as Jeff Koons, who will directly benefit from the American version of this law? Koons makes millions of dollars in commissions for creating things such as giant topiary puppies. Is he so disadvantaged that getting a check for $35,000 every time some subsequent purchaser buys one of his sculptures, such as his metallic balloon animals, will “fundamentally” address a wrong done to him in some way?

By way of conclusion, I would point out that readers are of course most welcome to disagree with anything I’ve written in the comment section of this post, as indeed you always are. Yet it seems to me that, from a purely rational, analytical point of view, one cannot deny the fact that those who will benefit most from the passage of this law are wealthy artists, and the government. Little or any benefit will be shown to accrue to the group of individuals which the A.R.T. Act was allegedly designed to help, but Congress will once again have found a clever way to tax American business while wrapping itself in a cloak of moral superiority.

Detail of “Elevation of the Dome of the U.S. Capitol” by Thomas Walter (1859)Library of Congress, Washington D.C.

Although I celebrate the principle of historic preservation, there are times when it can go a bit too far. The recent case here in Washington of the hideous Christian Science Church near the White House is a good example of how people confuse “old” with “historic” in this country. However there is a different topic in historic preservation which often gets overlooked, and that is the historic business. The question I want to pose to the reader is, do we have a moral duty to shopkeepers to preserve their old business, or does that business have to rise or fall through its own merits?

My favorite city in the world, Barcelona, is a very ancient place, founded by the Carthaginians and later populated by the Greeks and Romans. While no garum shops survive from Roman days – although you can find their amazingly well-preserved ruins in the underground streets atop which sits the City History Museum – there are some businesses still trading that existed a century or more ago. Set Portes restaurant down near the harbor, for example, has been serving seafood and rice dishes since 1836.

As of January 1st of this year, many of the older shops in Barcelona and throughout Spain are facing almost certain closure. A national law which we might translate as the “Urban Lease Act”, created substantial changes to the property leasing market throughout Spain. It contains a number of common-sense reforms, such as clarifying rights and responsibilities for landlord-tenant agreements for university students, but as part of these reforms, the new law also does away with existing rent controls for commercial properties. This means that many historic shops which lease their premises, and have existed for 50-100 years or more, are now facing extinction.

One early victim, the nearly 70-year-old Canuda bookshop in the Gothic Quarter, has already shut its doors. So has the superb Monforte toy store, which first opened its doors in 1840. And it has recently been announced that the lovely old Quilez grocery/delicatessen/liquor store, where I used to go to buy a very specific brand of Russian vodka one cannot find in this country, is going to have to close as well. The rent hikes on its prominent and prestigious building, located on the corner of a fashionable shopping street downtown, were too great to bear.

Of course, the change in the law will not affect all historic businesses the same way. As one might imagine, luxury dealers in items like women’s accessories or jewelry/watch dealers will probably survive. And although it will be too late for many historic businesses, Barcelona city officials are now scrambling – better late than never – to try to come up with some sort of municipal plan of action to save what is left, perhaps through tax breaks or zoning changes.

So this situation brings us back to the question I asked at the beginning of this piece, which is whether we have a moral obligation to protect businesses such as these from changes in the economic environment, or whether the effects of the market on such businesses are morally neutral.

No one likes to see a beautiful old business shut its doors, leaving a hole in a community where it had long-standing ties. There is something tragic about the loss to the fabric of a neighborhood when this happens, even if it the business in question was only open for a few decades rather than a few centuries. The departure of several old taverns in my Washington neighborhood of Georgetown for example – particularly The Guards – left me and many others genuinely saddened by the loss. Georgetown’s commercial district more and more comes to resemble an outdoor shopping mall for people who do not live in the neighborhood, and less of an actual neighborhood for those of us who do live there.

Yet the impetus to engage in commerce, lest one forget it, is in most cases not a charitable one. Commercial property ownership is not entered into with the expectation that one will lose money by engaging in it, any more than a commercial business sets up shop just to be nice. The parties are there to make a profit, and to ignore the profit-making principle is to sentimentalize their motives. In fact, to argue that a business should be preserved simply because it sells nice things that no one wants to buy is arguably a form of idolatary, in which we are asked to worship a golden calf in the form of a book or a marionette or a bottle of gin.

It seems to this scrivener that if there is a moral obligation to preserve an historic business, it is at best one limited to specific instances and not a universal principle – although I rely on you, gentle reader, to upbraid me in the comments box if you disagree. When customers are not buying, or profits are non-existent, that is unfortunate, and perhaps it is time to shift to trading in something else. However, that does not mean that the original commercial enterprise must be renewed ad infinitum simply because it is old. Otherwise, we would still have blacksmiths and wig makers on every corner.

The Colmado Quilez on Rambla Catalunya, Barcelona

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